Spurred on by consumer : and organized labor .S.. congressional _in- vestigating committees are beginning to take a sharp look _into the oil industry. The main question to be asked: Why is there a sudden scarcity of oil causing high prices and long waits in line at gas pumps? The investigating com- mittees want to hear the in- dustry’s side of the story. The mood of the American people is that the scarcity of gasoline is contrived by the oil industry. They have good reason to think that way. The American public has not forgotten about the so-called oil crisis of 1973-74. The nation then was gripped by a sudden searcity of oil. Motorists throughout the nation had to wait in long lines at gas stations. That, too, prompted Congressmen to respond to the public’s angry mood. Legislation in both the House and Senate was-introduced to curb the power of the oil in- dustry. : BLAMED INDUSTRY Much of their action, at the time, was based upon the findings of a Federal Trade - Commission (FTC) report issued in 1973. The FTC report, resulting from a two-year investigation of the oil in- dustry, placed the blame squarely upon the industry. The study stated that the major oil companies behaved “as would a classic mono- polist: They have attempted to increase profits by restricting output.” And now, the history of the 1973-74 oil crisis repeats itself. The outcries of five and six years ago to curb or to go so far as nationalize the oil industry were never heeded. The oil industry continues to hold on to its power. Andit is aligned with partners who have gained great strength since they became organized in 1960 — the oil producing -nations united under a group called Organization of Petroleum Exporting Countries (OPEC). That the world’s oil industry has power cannot be denied. It is an international industry which affects every nation in the world. It is truly multi- national in scope that functions as a cartel — whereby the major oil firms make agree- ments over the. control of market shares. And as multi- national oil companies, they have loyalty to no nation but only to profits. SEVEN MAJOR COMPANIES Although there are many firms in the industry, only seven companies are responsible for over 80 per cent of all oil production in the world. They are Exxon, Gulf, . British Petroleum, Mobil, Chevron, Shell and Texaco. Five are U.S.-based while British Petroleum and Shell are foreign owned. These giants represent a near-monopoly in the oil in- dustry. In economic ter- minology, they have oligopoly control of oil reserves, trans- portation, refining, and marketing facilities. Accord- ing to a 1949 Federal Trade Commission report, the major oil firms controlled 65 per cent of the estimated crude reserves in the world; 88 per eent of crude production out- side the U.S. and U.S.S.R; 77 per cent of refining capacity outside the U.S. and U.S.S.R; two-thirds of the tanker fleet in the world, and all major pipe- lines outside the U.S. and U.S.S.R. Thus, these multinational oil giants don’t need to worry about price competition. They simply pass price increases on to consumers. As one observer put it: The global oil com- panies act as tax collectors for the Arab Sheiks. And what part are the major oil companies playing in today’s oil crisis? The oil in- dustry claims that the world’s present oil shortage stems from the revolution in Iran which acted to curtail imports from that nation. That’s why, they say, oil prices are clim- bing ever higher. IMPORTED LESS OIL But authoritative investiga- tions show that the oil firms began to import less and use up _ its inventories prior to the con- fliet in Iran. And there was good reason for this. » 1977, the oil industry orted the existence of a ude oil surplus throughout > world. The Gulf Oil Cor- ration that the sur- / would continue through at a rate of 3.5 million Seah: soiling tothe { > to the d Gas Journal, the in- " eee titys trade ic 0 higher-priced crude to cut prices during the first quarter (1978) by between 1 and 30 cents a barrel . . . More cuts were made to apply to second- quarter sales.” The extent of the surplus was severe to Nigeria, the Journal noted, which was ‘‘one of the worst-hit countries with pro- duction of about 700,000 barrels daily without a market.” It’s facts like these which arouse wide-spread suspicion that the present oil crisis is staged managed by the major oil companies. After all, when a surplus exists and prices begin to fall, what is the natural reaction of near-mono- poly firms that can dictate supply and price? The answer is simple. If you have the power, you reduce the supply in order to bring up the price — especiallywhen demand is great. The bottom-line of these companies is not just to make profits — their goal is to maximize profits. A recent report of the Energy Action Educational Foundation, a consumer group, substantiates the oil industry’s drawdown of sup- ply. It states: “Gasoline stocks, the high levels at the beginning of 1978 plunged sharply throughout the first half of the year, so that by summer they had been reduced to levels lower than any time since the summer of 1975. They bottomed out at a level 22 per cent below 1977 and 7.1 per cent below 1976. “Again, no lessening in demand had occurred to justify these lowered stock levels. In fact, gasoline demand was up 3.6 per cent over 1977 for the first half of 1978, and a Oil and Gas Journal forecast was for a 2.7 per cent increase for the year as whole.”’ One indicator of the speed and depth of the gasoline draw- down in early 1978 is the change in the number of days of each month’s daily demand being held in stocks: The report revealed that 1978 ended with the oil companies reducing their inventories, their imports, and the capacity utilization of their refineries. And while that was going on the U.S. Government followed a policy that helped to make matters worse. At the end of 1978 it siphoned away from the nation’s crude oil supply an unprecedented amount into its Strategic Petroleum Reserve (SPR). The reserve is the gov- ernment’s stockpile for distri- bution of oil in case of national emergency. Statistics suppled by the Oil, Chemical, and Atomic Workers Union tell the story: Thus, at a time when crude oil stocks were still high, the U.S. Department of Energy’s policy to greatly increase the supply of the Strategic Petroleum Reserve inad- vertently helped: the oil -in- dustry’s position to raise its prices. The government added to the panic by agreeing with the oil companies that shor- tages were due primarily to the revolution in Iran. It also went on record to support high gas prices as a means to force con- sumers to buy less. The Energy Action Founda- tion concludes: “The statements from both the oil industry and the Government about the desir- ability of higher fuel prices and about the likelihood that a few good shortages will teach the public a lesson, taken together with the absence of any effort to prevent what the industry knew was happening and the Department of Energy should have known was hap- pening suggests either that they both wanted it to happen, or that the industry wanted it and knew that D.O.E. would ae or did not know how to stop i 3 ” ‘THE WESTERN CANADIAN LUMBER WORKER And where do the oil producing nations under OPEC fit into the picture? It should first be noted why OPEC was organized. The major oil multinationals were so power- ful that the oil producing nations felt forced to band together in 1960 under OPEC. They did so to increase their bargaining power and to pre- vent the oil companies from playing one nation off against another. Thus, OPEC now represents a seller’s cartel which functions to. offset the cartel power of the oil com- panies. With shortages created by the oil companies in 1978, panic followed. Thus, the bid for ~ imports increased greatly this year. Demand for oil in- creased. OPEC was quick to 11 take notice. It increased its prices at the wellhead. It added surcharges to the contract price of oil and it set aside large quantities of oil for sale on the spot market where oil was Selling for $40 a barrel. Both cartels are doing very nicely, profitwise. Is it possible that they.are working together to limit the use of their oil resources to make them last over a longer period of time? That’s one way to maximize their profits over a longer period of time. Meanwhile, the consumer suffers. It’s no wonder then that trade unions, consumer groups, and some lawmakers demand laws needed to curb the power of the oil giants — to bring them under control. UFCW ACTION SSL OEE IWA delegates to the Regional Convention demon- strated their support for the week-long boycott of Chile’s military junta by a march through the streets -of Van- couver September 13 carrying - placards protesting the treat- ment of the Chilean people. The boycot, called by the CLC and the International Con- federation of Free Trade Unions for the wéek of Sep- tember 9-16, was in recognition of the 6th anniversary of the overthrow of the Allende gov- ernment, Jim Kinnaird, President of the B.C. Federation of Labour stated that labour by setting the week of boycott helped to bring tothe attention of the public the plight of the Chilean people under the military dictatorhip which replaced the - legally elected government of Allende. .- He said that by participating in trade with the military dictatorship in Chile, we are giving tacit approval for what they did to the Chilean people in 1973. The B.C. Federation, he Stated, is totally opposed to the military junta and believes that Canada should cut all economic aid and trade agree- ments with the dictatorship. pS AS ME LAUT SST I BESET] LIGHTER SIDE Two men were sitting at a bar. “Tom,” asked one ‘‘after you drink a lot, does your tongue - burn?’’ * “Y don’t know, Jim,’’ an- swered the other. “I’ve never been drunk enough to light it.” “ey é- ope mw - ; LS ee ee